AZ Real Estate exam questions with
complete answers
Except during a time of emergency, property cannot be confiscated through use of: -
ANSWER-Under the government's rights of police power, property can be
confiscated in an emergency.
To receive a tax-free sale of your principal residence, the homeowner must live in
the property as their principal residence for at least: - ANSWER-Homeowners
seeking the tax-free gain exemption from the IRS must live in their home for at least
2 years.
A few real estate brokers from different companies were discussing the possibility of
establishing an office policy to list for sale all raw land at a 10% commission. Which
of the following is true? - ANSWER-Sherman Anti-Trust Law
A "mutual fund" for pooling investor money for investment in real estate: - ANSWER-
Real Estate Investment Trust REIT
A property owner is selling a house "For Sale by Owner." the seller places the ad in
the local newspaper looking for buyers. If the seller is on the Do Not Call Registry the
broker may call when: - ANSWER-The broker represents the buyer
Short term capital gains are taxed at - ANSWER-ordinary income tax rates
A trust deed is signed by the: - ANSWER-Trustor
Which of the following activities will not occur in the secondary market? - ANSWER-
Origination fees
A lender would add a margin to an index to accomplish which of the following? -
ANSWER-The purpose of the margin is for the lender to keep current with the cost of
new mortgages.
An escrow agent can be: - ANSWER-All: The escrow agent is responsible for
performing the closing procedures according to the sales contract or escrow
agreement.
If the buyer is assuming an existing loan on the property, which of the following is
prorated at closing? - ANSWER-Interest only
Which of the following would be a debit to the seller - ANSWER-Property Taxes
A preliminary title report would tell you all of the following except - ANSWER-Zoning
is not part of the preliminary title report
The Real Estate Settlement Procedures Act was enacted to: - ANSWER-RESPA
ensures that consumers are provided with important, accurate, and timely
,information about the actual costs of selling or closing a transaction, not about the
cost of obtaining a loan and interest. The costs of obtaining loans and interest are
provided under Regulation Z of the Truth-in-Lending Act.
RESPA does all of the following except: - ANSWER-The HUD-1 statement prevents
a buyer from being charged undisclosed fees; it requires disclosure of all costs
involved with the transaction.
Deed in Lieu - ANSWER-this conveys title to the lender when the borrower is in
default and wants to avoid foreclosure. The lender may or may not cease foreclosure
activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the
lender accepts, the avoidance and non-repayment of debt will most likely show on a
credit history. It may prevent having the documents preparatory to a foreclosure
being recorded and become a matter of public record. A deed in lieu will not
eliminate any liens against the property and a lender may be reluctant to accept it for
just this reason.
If the loan value is 80%, and the property was appraised at $86,500.00 and sold for
$88,000.00, how much would the purchaser be permitted to borrow? - ANSWER-The
borrower could borrow 80% of the 86,500. Which would be 69,200
A borrower pays off his loan. However, the lender refuses to cancel the mortgage.
Which of the following clauses of a mortgage has the lender violated? - ANSWER-
Defeasance clause
Notary Clause - ANSWER-The notarial clause is signed by the notary, stating that
the mortgage was signed freely and voluntarily by the borrower.
Defeasance Clause - ANSWER-A defeasance clause states that when the loan is
paid, the mortgage is void. The bank's failure to cancel the mortgage of record is a
violation of this clause.
Habendum Clause - ANSWER-The habendum clause is the "to have and to hold"
clause.
Conveyence clause - ANSWER-The conveyance clause states that the property is
being conveyed in a deed, not a mortgage.
The VA funding fee would change based on: - ANSWER-If a funding fee were to
exist in a VA loan, it would matter based on the LTV ratio.
A debit is - ANSWER-Money that is owed
The "escape clause" in FHA insured financing of a home purchase is the: -
ANSWER-The FHA requires that an escape clause be included with the purchase
contract that permits the buyer to cancel the contract if the property does not
appraise for the sale price.
What would NOT be provided for in a non-recourse loan? - ANSWER-A non-
recourse loan prevents a deficiency judgment.
, Deficiency Judgment - ANSWER-A deficiency judgment is an unsecured money
judgment against a borrower whose mortgage foreclosure sale did not produce
sufficient funds to pay the underlying promissory note, or loan, in full.
non-recourse loan - ANSWER-a loan that limits the lender's repayment options to the
assets of the business and the collateral at risk
Recourse Loan - ANSWER-a loan that allows the lender to seek repayment from the
borrower's personal assets
At what point does recordation take place? - ANSWER-The document is recorded at
the close of escrow and priority of the lien is established by the docket and page
number.
Any broker or salesperson who initiates a suit to recover a commission for
performing a regulated real estate activity must first be able to prove that he/she was
properly _____ at the time the claim arose. - ANSWER-According to A.R.S. 32-2152
(A): to commence an action to recover a commission, the broker or salesperson
must prove that he/she was properly licensed at the time the claim arose.
Before placing or erecting a sign giving notice that specific property is being offered
for sale, lease, rent or exchange, a licensee shall secure: - ANSWER-According to
Commissioner's Rule R4-28-502 (I): before placing or erecting a sign giving notice
that specific property is being offered for sale, lease, rent, or exchange, a
salesperson or broker shall secure the written consent of the property owner, and the
sign shall be promptly removed upon request of the property owner.
A licensee owes a fiduciary duty to the client that includes protecting and promoting
the client's interests. If the client is the seller or lessor and may be unable to perform,
the licensee: - ANSWER-According to Commissioner's Rule R4-28-1101 (B1): a
licensee participating in a real estate transaction shall disclose in writing to all other
parties any information which the licensee possesses that materially and adversely
affects the consideration to be paid by any party to the transaction, including any
information that the seller or lessor may be unable to perform.
Cumulative Zoning - ANSWER-is a method of zoning in which any use permitted in a
higher-use, less intensive zone is permissible in a lower use, more intensive zone.
For example: under this method, a house could be built in an industrial zone but a
factory could not be built in a residential zone.
When zoning is cumulative this means that: - ANSWER-In an R-3 area, R-1 and R-2
uses are permitted
Ernest Money - ANSWER-it shows buyers sincere intention (putting skin in the
game), and serves as liquidated damages thus protecting seller if buyer breaches.
Note that earnest money is not required but does bolster an offer.
The broker is required by Arizona law to reconcile his or her trust account -
ANSWER-Bank reconciliation and client ledger is balanced monthly.
complete answers
Except during a time of emergency, property cannot be confiscated through use of: -
ANSWER-Under the government's rights of police power, property can be
confiscated in an emergency.
To receive a tax-free sale of your principal residence, the homeowner must live in
the property as their principal residence for at least: - ANSWER-Homeowners
seeking the tax-free gain exemption from the IRS must live in their home for at least
2 years.
A few real estate brokers from different companies were discussing the possibility of
establishing an office policy to list for sale all raw land at a 10% commission. Which
of the following is true? - ANSWER-Sherman Anti-Trust Law
A "mutual fund" for pooling investor money for investment in real estate: - ANSWER-
Real Estate Investment Trust REIT
A property owner is selling a house "For Sale by Owner." the seller places the ad in
the local newspaper looking for buyers. If the seller is on the Do Not Call Registry the
broker may call when: - ANSWER-The broker represents the buyer
Short term capital gains are taxed at - ANSWER-ordinary income tax rates
A trust deed is signed by the: - ANSWER-Trustor
Which of the following activities will not occur in the secondary market? - ANSWER-
Origination fees
A lender would add a margin to an index to accomplish which of the following? -
ANSWER-The purpose of the margin is for the lender to keep current with the cost of
new mortgages.
An escrow agent can be: - ANSWER-All: The escrow agent is responsible for
performing the closing procedures according to the sales contract or escrow
agreement.
If the buyer is assuming an existing loan on the property, which of the following is
prorated at closing? - ANSWER-Interest only
Which of the following would be a debit to the seller - ANSWER-Property Taxes
A preliminary title report would tell you all of the following except - ANSWER-Zoning
is not part of the preliminary title report
The Real Estate Settlement Procedures Act was enacted to: - ANSWER-RESPA
ensures that consumers are provided with important, accurate, and timely
,information about the actual costs of selling or closing a transaction, not about the
cost of obtaining a loan and interest. The costs of obtaining loans and interest are
provided under Regulation Z of the Truth-in-Lending Act.
RESPA does all of the following except: - ANSWER-The HUD-1 statement prevents
a buyer from being charged undisclosed fees; it requires disclosure of all costs
involved with the transaction.
Deed in Lieu - ANSWER-this conveys title to the lender when the borrower is in
default and wants to avoid foreclosure. The lender may or may not cease foreclosure
activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the
lender accepts, the avoidance and non-repayment of debt will most likely show on a
credit history. It may prevent having the documents preparatory to a foreclosure
being recorded and become a matter of public record. A deed in lieu will not
eliminate any liens against the property and a lender may be reluctant to accept it for
just this reason.
If the loan value is 80%, and the property was appraised at $86,500.00 and sold for
$88,000.00, how much would the purchaser be permitted to borrow? - ANSWER-The
borrower could borrow 80% of the 86,500. Which would be 69,200
A borrower pays off his loan. However, the lender refuses to cancel the mortgage.
Which of the following clauses of a mortgage has the lender violated? - ANSWER-
Defeasance clause
Notary Clause - ANSWER-The notarial clause is signed by the notary, stating that
the mortgage was signed freely and voluntarily by the borrower.
Defeasance Clause - ANSWER-A defeasance clause states that when the loan is
paid, the mortgage is void. The bank's failure to cancel the mortgage of record is a
violation of this clause.
Habendum Clause - ANSWER-The habendum clause is the "to have and to hold"
clause.
Conveyence clause - ANSWER-The conveyance clause states that the property is
being conveyed in a deed, not a mortgage.
The VA funding fee would change based on: - ANSWER-If a funding fee were to
exist in a VA loan, it would matter based on the LTV ratio.
A debit is - ANSWER-Money that is owed
The "escape clause" in FHA insured financing of a home purchase is the: -
ANSWER-The FHA requires that an escape clause be included with the purchase
contract that permits the buyer to cancel the contract if the property does not
appraise for the sale price.
What would NOT be provided for in a non-recourse loan? - ANSWER-A non-
recourse loan prevents a deficiency judgment.
, Deficiency Judgment - ANSWER-A deficiency judgment is an unsecured money
judgment against a borrower whose mortgage foreclosure sale did not produce
sufficient funds to pay the underlying promissory note, or loan, in full.
non-recourse loan - ANSWER-a loan that limits the lender's repayment options to the
assets of the business and the collateral at risk
Recourse Loan - ANSWER-a loan that allows the lender to seek repayment from the
borrower's personal assets
At what point does recordation take place? - ANSWER-The document is recorded at
the close of escrow and priority of the lien is established by the docket and page
number.
Any broker or salesperson who initiates a suit to recover a commission for
performing a regulated real estate activity must first be able to prove that he/she was
properly _____ at the time the claim arose. - ANSWER-According to A.R.S. 32-2152
(A): to commence an action to recover a commission, the broker or salesperson
must prove that he/she was properly licensed at the time the claim arose.
Before placing or erecting a sign giving notice that specific property is being offered
for sale, lease, rent or exchange, a licensee shall secure: - ANSWER-According to
Commissioner's Rule R4-28-502 (I): before placing or erecting a sign giving notice
that specific property is being offered for sale, lease, rent, or exchange, a
salesperson or broker shall secure the written consent of the property owner, and the
sign shall be promptly removed upon request of the property owner.
A licensee owes a fiduciary duty to the client that includes protecting and promoting
the client's interests. If the client is the seller or lessor and may be unable to perform,
the licensee: - ANSWER-According to Commissioner's Rule R4-28-1101 (B1): a
licensee participating in a real estate transaction shall disclose in writing to all other
parties any information which the licensee possesses that materially and adversely
affects the consideration to be paid by any party to the transaction, including any
information that the seller or lessor may be unable to perform.
Cumulative Zoning - ANSWER-is a method of zoning in which any use permitted in a
higher-use, less intensive zone is permissible in a lower use, more intensive zone.
For example: under this method, a house could be built in an industrial zone but a
factory could not be built in a residential zone.
When zoning is cumulative this means that: - ANSWER-In an R-3 area, R-1 and R-2
uses are permitted
Ernest Money - ANSWER-it shows buyers sincere intention (putting skin in the
game), and serves as liquidated damages thus protecting seller if buyer breaches.
Note that earnest money is not required but does bolster an offer.
The broker is required by Arizona law to reconcile his or her trust account -
ANSWER-Bank reconciliation and client ledger is balanced monthly.
